Executives' Comments  Press Conferences   Chairman Sakakibara's Statements and Comments
at His Press Conference

September 25, 2017

Snap Election

Prime Minister Abe today announced the dissolution of the House of Representatives at a board meeting of the Liberal Democratic Party (LDP). Media reports have suggested that the upcoming snap election is being held to seek people's confidence in government action on a range of issues including the achievements and prospects of Abenomics, enhancement of social security systems, responses to the North Korea issue, and constitutional reform. These are all timely points of contention in the current political situation. Abenomics has produced highly significant results, but inadequacies remain in areas such as consumption, inflation, and potential growth rates. I urge the parties to set forth their policies on such points and debate them in the election campaign.

Public opinion polls indicate that many people feel this is not the right time to dissolve the House of Representatives. However, dissolution is at the sole prerogative of the Prime Minister, and I believe he has made his decision after considering the overall situation.

Consumption Tax Increase and Fiscal Consolidation

The business community would welcome implementation of the consumption tax increase on schedule in October 2019. This would secure a stable source of revenue for free early childhood education and enhanced social security systems. Business leaders share the Prime Minister's views on enhancing social security systems and reinforcing fiscal consolidation by increasing consumption tax as planned.

The government should steadfastly maintain its goal of achieving a budget surplus in the primary balance by fiscal 2020. Fiscal restructuring will be achieved not only by increasing consumption tax, but also by a three-pronged approach to expenditure reform, revenue reform, and economic growth. Even if a portion of revenue from the consumption tax increase is used to enhance social security systems, I hope that in general terms the government will adhere to the goal of achieving a budget surplus in the primary balance by fiscal 2020.

Amid rising social security expenditure as the birth rate declines and society ages, Keidanren has long stated its view that sound and sustainable operation of social security systems will only be possible if the consumption tax rate is increased to the high teens. I am aware that raising consumption tax is difficult, but tax rates of 20% or more are a matter of course in many European countries. Increasing consumption tax beyond 10% is necessary in order to ensure that social security systems remain sustainable, and the business community will continue to emphasize this view.

Appraising Abenomics

Overall, Abenomics can be evaluated as having produced highly significant results. After remaining flat for 20 years, GDP has now far exceeded 500 trillion yen. Tax revenue has risen by around 14 trillion yen even without the consumption tax increase, corporate profits have expanded, and employment figures have jumped. Numerous economic indicators have improved, and these achievements should be acknowledged.

In foreign relations, frameworks for free trade between regions are being put in place: general accord has been reached on a Japan-EU Economic Partnership Agreement (EPA), and Japan is taking leadership in Trans-Pacific Partnership (TPP) talks aimed at creating a TPP11 agreement following the withdrawal of the United States. Prime Minister Abe's diplomatic initiatives have succeeded in bolstering the presence of Japan in the global economy and international politics, and these achievements should be rated highly.

However, the economic growth rate currently remains stuck around 1.5%, falling short of the target of 2% actual growth and 3% nominal growth. The 2% inflation target has not been met either. Although the government has managed to create a situation that is not deflationary, it still cannot declare an end to deflation, and Abenomics needs to be followed through to a convincing conclusion. I sincerely hope that the government will use the impending election campaign to set forth policies aimed at achieving these goals and completing the tasks set by Abenomics.

Bill on Working Style Reform

The snap election will alter the schedule for debating this bill, and its enactment is now bound to be delayed. However, the business community hopes that flexible provisions for high-level professionals and other revisions to the Labor Standards Act will be passed promptly.

The Relationship between Business and Politics

In order to make progress on a host of policy issues, it is crucial to maintain a stable administration and the current structure of a ruling coalition led by the LDP. The business community supports parties that encourage corporate activity and economic policies based on the concept of a liberal economy.

Although I have not previously used the term "two-party system," I believe that a healthy political environment is one where a sound opposition party capable of governing the country challenges the policies of the ruling party. We should welcome the presence of an opposition party that will place checks on ruling party policies and offer another opinion.

Party of Hope

The governor of Tokyo, Yuriko Koike, has established a new political force call the "Party of Hope" and been appointed as its leader. Such a move is not unprecedented, as illustrated by a similar example (the Japan Innovation Party) in Osaka. The Tokyo Metropolitan government faces a raft of challenges, not least the hosting of the Tokyo Olympic and Paralympic Games in 2020. I will closely watch Ms. Koike's performance to see how she reconciles her duties as governor with her role as party leader.

Moritomo Gakuen/Kake Gakuen Scandals

Prime Minister Abe attended a recent out-of-session Diet hearing to reflect in his own words on the Moritomo Gakuen and Kake Gakuen scandals, and I recognize that he provided clear explanations. However, many people feel that these explanations were inadequate. I urge the government to sincerely acknowledge these concerns, and to offer further explanations to gain the understanding of the people.

Constitutional Issues

In the face of the threat from North Korea, I believe that the people of Japan have gained a certain understanding of the need to clarify the position of the Self-Defense Force in the Constitution. Some public opinion polls have indicated that a majority of respondents are in favor of constitutional reform. Constitutional reform is also an important issue for business leaders, but we have consistently emphasized our desire for this issue to be addressed only in the context of prioritizing the economy, and this stance remains unaltered.